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Important changes take time – in this case a loophole in the US Tariff Act of 1930 has just been closed, with important implications for the protection of workers in severely exploitative working conditions.

President Obama has signed a bill – the Trade Facilitation and Trade Enforcement Act – that, among other things, amends the US Tariff Act of 1930. This represents an important victory for the collective work of the anti-slavery community and, it should be noted, a bipartisan group of legislators. Why? Because the Depression Era Tariff Act had a provision designed to protect the US economy from unfair competition from foreign producers that relied on forced, child or prison labor. But there was a huge loophole that ensured that the provision was almost never used: if producers in the US couldn’t meet the entire consumer demand for the product, then no action could be taken against tainted products from other countries. This ‘consumptive demand’ exemption was eliminated as part of the recently enacted Trade Facilitation and Trade Enforcement Act.

Closing this loophole has been a priority for the pre-eminent anti-slavery policy coalition, the Alliance to End Slavery and Trafficking (ATEST), of which we are proud members.  Verité’s research on risks of modern-day slavery in electronics in Malaysia, fishing in Thailand, and commodity production worldwide helped highlight the urgent need for this change.  

The closure of the “consumptive demand” loophole is big news and has been receiving a good deal of media coverage, such as this CNBC article quoting our Shawn MacDonald.

We note that meaningful implementation of this law by the Immigration and Customs Enforcement (ICE) Agency will be complicated. A US customs official will need credible information that the specific products in a particular shipping container were likely made with forced labor through a link to a particular workplace or employer where problems have been identified. This change in the law does not represent a wholesale ban on importation of an entire product category from an entire country. 

ATEST is pushing to strengthen ICE’s ability to enforce the law. This likely will lead to more investigations of suspect supply chains. This also means that other efforts by the US government to delineate where forced and child labor occurs (such as the US Department of Labor’s list of goods made with forced or child labor and the State Department’s Trafficking in Persons report) will take on even more meaning, as ICE will reasonably look to those lists and reports for how to prioritize the products and countries they investigate. 

The potential for enforcement provides a further reason for companies to conduct effective due diligence on the great risks faced by workers in their operations and supply chains.  The Federal Government has proven a powerful ally for advocates in the past few years through the Federal Acquisition Regulations emerging from the President’s 2012 Executive Order and the inclusion of supply chains as a key area of exploration and attention in the State Department’s Trafficking in Persons Office annual reporting. Governments in Europe are pursuing transparency and other regulations to crack down on forced labor.  The pendulum is clearly swinging towards legal and regulatory accountability for supply chains after decades of focus on voluntary initiatives that rely on reputational risk as their primary driver.